Uber faces costly choices after expert finds it uses Waymo self-driving tech

Uber said it "will likely" have to strike a licensing deal with Waymo or opt for costly changes to its autonomous driving software, after an expert found the ride-hailing giant still used technology from the Alphabet Inc unit.

While it was unclear by when the company needed to decide on its next move in the blockbuster trade secrets dispute, Uber, in a quarterly securities filing on Tuesday, said that a detour in its software development "could limit or delay our production of autonomous vehicle technologies."

Uber has been racing to catch up to Waymo in the development of software and hardware to install in cars and trucks to allow for driverless taxi and delivery services.

The expert review of Uber's software was part of a legal settlement reached in February 2018 that brought to an abrupt halt a federal jury trial over whether the company unfairly benefited from confidential ideas allegedly secured by making former Waymo engineers key members of its self-driving car team.

Waymo began as a project within sister company Google a decade ago, while Uber launched its effort four years ago. Uber declined to give details beyond its filing.

Waymo told Reuters in a statement that the independent software expert's findings "further confirm Waymo's allegations that Uber misappropriated our software intellectual property. We will continue to take the necessary steps to ensure our confidential information is not being used by Uber."

Last year, Uber Chief Executive Dara Khosrowshahi had expressed confidence that the company had not used Waymo's proprietary information in its hardware or software. But by this April, weeks ahead of its initial public offering, Uber disclosed that the expert software reviewer's interim findings were mixed and could be costly. Waymo had alleged in court filings in 2017 that Uber was "misappropriating two, highly valuable Waymo trade secrets related to planner software," which processes data from sensors on the vehicle and controls its movement.

Uber shares have tumbled about 40% since their market debut in May amid big quarterly losses as it spends heavily on marketing. Its self-driving venture has also faced other challenges. The United States National Transportation Safety Board in a recent report there were software flaws in an Uber self-driving test vehicle that struck and killed an Arizona woman in the middle of a road last year.

Still, the Uber unit drew a $1 billion (£778 million) investment in April from SoftBank Group Corp, Toyota Motor Corp and automotive company Denso Corp. Last year's settlement also gave Waymo a 0.34% stake in Uber, worth about $245 million based on Uber's $72 billion valuation at the time. It is unclear if Waymo still holds those shares. Waymo this year began a limited robo-taxi service in Arizona.